The other granted cases
on Nov 14, 2011 at 2:14 pm
The Supreme Court took on Monday a significant new case on the constitutional duty of local governments to treat taxpayers equally, when they are involved in similar transactions. This was one of two cases the Court accepted for review, beyond its headline-making grants in the health care cases. The other newly granted case will test the rights of children to receive Social Security survivors’ benefits after a parent dies.
The tax equality case involves a dispute over refunds being sought by a group of homeowners in Indianapolis, because their neighbors got more favorable treatment on the taxes collected for a new sewer project. A larger question looming in the case, however, is whether the Court will provide new guidance on when states are required to refund the revenue they have already collected, after the reasons for collecting it have changed significantly or have been abandoned. Advocacy groups that specialize in tax issues asked the Court to see the case in this broader context.
The case, Armour, et al., v. Indianapolis, et al. (docket 11-161), may require the Court to sort out two of its most significant rulings on claims of tax discrimination: Allegheny Pittsburgh Coal Co. v. County Commission, in 1989, and Nordlinger v. Hahn, in 1992. In the first case, the Court ruled that it violates the equal protection guarantee of the Constitution for county governments to adopt an assessment policy that treats comparable property in grossly disparate ways, resulting in sharply different tax bills. In the other, the Court decided that it did not violate equal protection when a state constitutional amendment assessed real property at values related to the property value at the time it was bought, rather than to the value it would have in a current realty market.
The new Indianapolis case grows out of sewer tax assessments on residents of the Northern Estates subdivision. When the city made plans for a new sanitary sewer project, it gave homeowners in that neighborhood a choice of paying the sewer taxes all at once, or on the installment plan over a period of years. Owners of 31 parcels chose to pay the entire amount up-front, while others, the majority of those affected, chose to pay in installments.
Later, however, the city council adopted a new plan to pay for the project. It abandoned the existing tax assessment system, and imposed a flat fee per dwelling to connect to the sewers. The local public works board then decided to forgive all assessment amounts that remained due from the homeowners, eliminating any continuing obligation for owners of 142 parcels. The 31 other parcels’ owners asked for refunds, since they had paid everything they owed at the outset. City officials refused and their refusal ultimately was upheld by the Indiana Supreme Court.
The state court ruled that the Supreme Court’s decision in the Allegheny Pittsburgh case should be understood as confined to its specific facts. It said the city had drawn a clear line for moving to the new funding system, to help middle- and lower-income taxpayers. The city, it added, was entitled to assume that those who had paid in the beginning were better off, financially, so the two groups were not on equal legal footing.
That case, along with the newly granted children’s benefit cases, are expected to be argued during February.
In the benefits case, Astrue v. Capato, et al. (11-159), federal Social Security officials asked the Court to clarify when a child of a wage-earner is entitled to survivor benefits after the parent dies. The specific issue is whether, if a child has been conceived after the death of a biological parent, the child is eligible for survivor benefits, if the child would not be eligible to inherit from that parent as a matter of state law.
The case involves a pair of New Jersey twins, who were conceived by their mother after their father had died, using sperm that the father had deposited with a medical facility after learning that he had cancer. Because the couple, then newly married, wanted to have children, and because the father was told that chemotherapy for his treatment might make him sterile, he made the sperm deposit. After his death, his wife went through a series of in vitro fertilization treatments, ultimately giving birth to the twins in 2003.
The woman, Karen Capato, now living in Basking Ridge, N.J., applied for survivors’ benefits for the twins, based on their biological father’s earnings record under the Social Security system. The request was denied, on the premise that the twins were actually conceived after their father had died, and thus did not qualify as his children. The latter conclusion was based on the fact that Florida, where the father had died and deposited the sperm, would not allow the twins to inherit from their father. The Third Circuit Court, however, ruled that Florida law was not controlling since state law only was considered under Social Security when there was a dispute as to whether a child was actually a part of the wage-earner’s family. There was no such issue in this case, the Circuit Court ruled.
Taking the case on to the Supreme Court, the Social Security administrator, Michael J. Astrue, argued that the Circuit Court decision undermined a long-standing government policy of denying survivor benefits when a child is conceived after the wage-earner parent had died.